Name, location thorny issues in merger talks

ATLANTA - A particularly thorny issue for Delta Air Lines in its talks with United Airlines and Northwest Airlines about a combination with one of the carriers is where the merged company would be based and what it would be called, industry observers say.

Delta executives in recent months have spoken in near absolute terms about their desire and intention of keeping the Delta name and the headquarters in Atlanta.

But aviation experts say such certainties are hard to achieve in complex merger negotiations that often involve competing interests.

'This is a business of egos,' said Robert Mann, a Port Washington, N.Y.-based airline consultant. 'While lots of things get negotiated, some of the toughest to negotiate are those sorts of issues that go with what it's going to be called, where it's going to be headquartered and who is going to run it.'

Delta spokeswoman Betsy Talton reiterated Monday that Delta's board is analyzing strategic options, including potential consolidation transactions, but she declined to provide any update on the process or address the name and headquarters location issues.

Rep. Lynn Westmoreland, R-Ga., said his office has told Delta officials of its concern about the course of the merger discussions and in particular the issue of possibly moving the headquarters and changing the company name.

He said he has seen recent news reports discussing various merger scenarios involving the three airlines.

'Usually in this business you find out where there's smoke, there's fire,' Westmoreland said.

Northwest officials are likely just as eager to see any combination they are involved in keep the Northwest name and the company based in Eagan, Minn., as United officials would likely want to keep the United name and keep its parent company, UAL Corp., based in Chicago.

In Northwest's case, Minnesota Gov. Tim Pawlenty pointed out last week in a letter to the CEOs of Northwest and Delta that Northwest has made financial commitments to keep its headquarters and a hub in Minnesota. Northwest would give up $215 million in financial incentives at the airport between now and 2020 if it moves its headquarters out of Minnesota. Pawlenty told reporters Thursday that his state would be willing to make additional commitments if that would keep Northwest based there.

One of the biggest factors driving renewed talk of consolidation has been the sharp increase in fuel prices, among the industry's biggest costs. Jet fuel costs have surged along with the price of oil, which jumped 58 percent last year.